Seneca Seeks Proxy Fight at Dynegy

Seneca Capital, Dynegy’s largest shareholder and a staunch opponent of the energy company’s proposed $4.7 billion takeover by the Blackstone Group, on Thursday made good on its promise to mount a proxy fight against the company.

The investor nominated a former railroad executive, E. Hunter Harrison, and an energy company executive, Jeff D. Hunter. If elected, they would replace Bruce Williamson, Dynegy’s chief executive, and David Biegler, a current director.

The move won’t affect whether the Blackstone deal is approved, since the only matter on the table at the shareholder meeting on Nov. 17 is a vote on the proposed leveraged buyout.

The two sides have been running full-court presses against each other. Seneca (and another investor, the billionaire Carl C. Icahn) has argued that Blackstone’s $4.50-a-share bid, coupled with a $1.36 billion sale of assets to NRG Enegy, undervalues Dynegy.

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Meanwhile, Dynegy has argued that a rejection of the Blackstone deal would leave the company in a perilous financial state, especially given its forecasts of negative cash flow and the need to refinance large swaths of its debt. (On Thursday, the company put out a news release compiling quotes from six analyst reports advocating for the deal.)

Here’s the rundown on the two Seneca candidates:

E. Hunter Harrison: a former chief executive and longtime veteran of the Canadian National Railway Company, and formerly the chief executive of Illinois Central Railroad

Jeff D. Hunter: a co-founder and chief financial officer of U.S. Power Generating Company, a power company that operates in New York and New England, and formerly a consultant at PA Consulting.

(Seneca isn’t seeking to seat more directors at the moment to avoid triggering a change-of-control provision in Dynegy’s debt, which could lead to a big payout that would burden the company.)

Here’s a Seneca statement:

Seneca believes that its plan for a refocused Dynegy with a re-energized Board including Mr. Harrison and Mr. Hunter, both of whom are aligned with shareholders, should provide an extremely attractive proposition to the substantial number of investors that Seneca believes are awaiting the defeat of the proposed merger to build or add to their investment positions in Dynegy stock.